Tan topped up, tick. Now fix the mortgage!

For households feeling the effect of rising prices, this could not come at a better time

ALTHOUGH glorious summer holidays (bar the odd threat of a forest fire) may be the order of the day, many homeowners should put a note in their diary to review their mortgage as soon as they get back.

September and October will see tens of thousands of homeowners’ mortgage deals come to an end – the biggest two-monthly chunk for five years. In total, £35 billion of home loans could be remortgaged.

For many households feeling the effect of rising prices and stagnant earnings, this could not come at a better time. A combination of lower mortgage rates and reduced loan-to-value ratios (a result of rising house prices) should let them cut the cost of their biggest monthly outgoing. A timely blessing.

Yorkshire Building Society – keen to profit from this coming remortgaging frenzy – has tried to quantify the benefits some homeowners may reap. It says someone who took out a £225,000 loan two years ago to buy a £250,000 home in London (presumably the size of a hamster cage) could remortgage with the benefit of a reduced loan-tovalue. The lower the ratio, the keener the mortgage rate that most lenders offer.

If this homeowner originally locked into a two-year, fixed-rate mortgage at 3.6 per cent – the average at the time – Yorkshire says they now could save £255 a month by opting for a new twoyear fixed rate at 1.14 per cent (guess which lender offers it?).

While this would incur more than £1,200 in product and valuation fees, these costs would soon be mitigated by the ongoing savings.

Of course, not everyone switching loans would benefit as handsomely. Also, a five-year fixed-rate loan might be more sensible than a two-year deal, given the wave of uncertainty that lies ahead – Brexit, higher interest rates, resilient inflation, an economic downturn, Jeremy Corbyn et al.

But Yorkshire’s message is a prescient one. Once you have enjoyed your moment in the holiday sun (and avoided those fires), do not miss the opportunity to shave your mortgage outgoings.

RELEASING equity from your home to help fund your retirement – via a roll-up mortgage – is more popular than ever, as evidenced by the latest statistics from the Equity Release Council. These confirm that new lending in the sector in the second quarter of this year hit a record high: over £700 million.

While equity release finance is expensive – primarily because of the impact of compound interest – lenders continue to improve their offers. For example, customers can now draw down funds in stages rather than all in one go, mitigating interest charges. They can also ring-fence a portion of their home’s value for inheritance purposes.

Quality advice from a qualified adviser is essential. If you want to learn more, The Mail on Sunday has produced an informative – and independent – guide. Ring 0800 531 6012 for a copy.

ENSURING your finances remain fit for purpose should be ingrained in your financial DNA.

It is a point we reiterate in the article opposite, which looks at the importance of checking whether any financial protection insurance bought a while ago is as robust as new cover available today. It often is not as Maureen McShea found to her cost.

The same applies to investments. In an era where more people are managing their investments and pension funds via online platforms, it is vital their investment portfolios remain robust. In other words, that they are diversified and the components – shares, bonds, investment funds and trusts – are all performing satisfactorily.

Financial adviser Tilney has just produced a useful report that helps investors separate the wheat from the chaff. Its ‘spot the dog’ guide highlights those investment funds it believes are doing investors a disservice by underperforming on a consistent basis.

The report identifies 34 errant funds managing £7.6 billion of investors’ assets between them. Helpfully, it also lists investment funds that perform consistently.

Although the guide contains a few too many doggie cliches for my liking, its publication is useful.

At the very least, it should prompt you into reviewing your investments to see whether they need a summer clean on either performance or cost grounds. Dirt cheap index-tracking investment funds from the likes of Vanguard are more widely available than ever before. Download a copy at bestinvest.co.uk/dogs.

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